Inheritance tax (IHT) receipts have continued to increase in August, with an extra £300m collected compared to the same period last year.

Between April and August this year, HMRC collected £3.2bn in IHT receipts, latest figures have shown.

In August, £644m was raised in IHT, compared to £576m in the same period last year.

The Office for Budget Responsibility has predicted that IHT will raise £7.2bn in the current financial year, with as much as £8.4bn being collected by 2027/28.

However, there is speculation that the Government is looking to scrap IHT ahead of the next general election.

Group communications director at Just Group, Stephen Lowe, said that IHT receipts are continuing to “swell the Treasury’s coffers” as it generates record sums year-on-year, with frozen thresholds and property price increases catching thousands more estates in the IHT net.

“This spring, HMRC significantly increased its prediction of the number of new estates expected to be dragged into paying IHT in 2021 to 2028,” Lowe commented. “It now estimates that almost 50,000 new estates will incur the tax, a near four-fold increase compared to their previous estimate in November 2022.

“The increase in receipts should act as a warning for people to remember to assess the entire value of their estate, including an up-to-date valuation their property. Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage that tax bill.”

Tax partner at Evelyn Partners, Laura Hayward, added that rising IHT receipts are continuing to prove “extremely lucrative” for the Treasury and that the trend doesn’t look set to change anytime soon.

“The latest update from HMRC provides a timely reminder for families that they may pay more IHT than they need to if they don’t plan ahead,” Hayward warned. “It’s a complex area and so families may wish to consider taking professional tax planning advice to help them consider the different options available to them.

“One of the best places to start in reducing or eliminating an IHT bill is by considering gifting to family members. Gifts you make are generally not subject to IHT unless you die within seven years. There is also an annual gift allowance of up to £3,000 per tax year, and this will not be subject to IHT even if you do die within seven years.

“However, the possibility of reducing an IHT bill goes beyond gifting. Other options include investing tax efficiently, business relief and setting up trusts, which, in the right circumstances, allow assets to be tax efficiently passed on to the next generation while ensuring they are used in a responsible way.”

Share Story: